Index Financial Glossary

What is it? A number, usually a percentage, upon which future interest rates for adjustable rate mortgages are based. Common indexes include the major bank Prime rate, the CMT (Constant MaturityTreaury - usually for a 1-year term), COFI (Cost of Funds for the Eleventh District financial institutions), and the MTA -average rate of a one year Government Treasury Security. For example, interest rates on adjustable rate loans change in accordance with changes in certain index values.

Finance Term Definition Added By: Charlotte

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